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Will Toyota Cut U.S., British workers?

Last summer Toyota won plaudits for not laying off workers when it shuttered plants to reorganize U.S. production. Instead of cutting its headcount, workers undertook extra training, helped out at other plants, and participated in community projects. But with the auto-sales slump showing no signs of halting, and a first operating loss since 1938 imminent, will Toyota soon start cutting employees?

Reports in Japan say cuts could be imminent. According to a story in today’s Nikkei newspaper, Toyota is considering shedding 1,000 U.S. and British employees after the slowdown sales picked up pace in December. If that happens, it will be the first time Toyota has cut full-time employees since 1950, when it trimmed 1,600 workers in Japan through early retirement. In Japan, Toyota has already announced plans to cut about 5,000 of its 8,800 contract employees. Toyota says it does its utmost to preserve employment and that no decision has been taken regarding job layoffs.

If the reports turn out to be correct, the layoffs need to be putting into perspective. Toyota employs about 30,000 in the U.S. and 5,000 in the UK. Meanwhile, the report adds that Toyota will try to cushion the blow by increasing retirement benefits and helping retirees find new jobs (no easy task during a recession).

What is clear, though, is that new Toyota chief Akio Toyoda will face plenty of tough decisions when he takes the helm in June. In the year through March, Toyota expects to post an operating loss of about $1.7 billion, but a small net profit in part thanks to sales in China and at other subsidiaries in 2008. Unless sales recover or the Japanese yen suddenly falls, next year analysts expect more red ink.